Golden Minerals Company

The 1990s were a lost decade for Japan. The 2000s delivered a lost decade to U.S. investors. Now, five years into the onset of the financial crisis, with stock and bond markets booming, housing resurgent, and even Detroit redeemed, it’s savers who find themselves in a lost decade.

This runs counter to the lessons of the credit bubble. We were urged to spend less, save more, tell fewer lies on our mortgage applications. Problem is, the jumbo monetary response to that era’s excesses—0 percent interest rates, followed by trillions in quantitative easing and a vow to keep rates this low until at least 2015—is bent on getting people and companies spending and investing (and out of cash) at pretty much any cost.

With the Fed having done everything in its power (and then some) to jackhammer down the Treasury curve, the average money-market fund yields 0.12 percent, which is bank boilerplate for nothing. A one-year CD offers 0.30 percent, and a 5-year certificate pays 1 percent. Your aforementioned 10 grand—no doubt dearer to you in this era of chronically high unemployment and uncertainty about retirement—huffs and puffs to produce a mere $100 in annual income. Back out taxes and inflation, and you’re losing money in a bank account—however FDIC-insured it may be.

This article showed up on the businessweek.com Internet site yesterday...and I thank West Virginia reader Elliot Simon for our first story of the day. The link is here.

The latest round of extraordinary Federal Reserve stimulus is risky and leaves little room to maneuver should another crisis hit, economist Lawrence Lindsey told CNBC’s “Squawk Box” on Wednesday.

Lindsey said that with the Fed purchasing at least $40 billion a month in mortgage debt through QE3, “they are buying the entire deficit.”

“I have no problem doing extraordinary things in extraordinary times,” said Lindsey, a former White House economic advisor under former president George W. Bush who now runs his own consulting firm.

The story was posted on the cnbc.com website at lunchtime in New York yesterday...and I thank Washington state reader S.A. for sending it. The link is here.

Argentina's President Cristina Kirchner hit back at the IMF on Tuesday for warning her country about bad data, saying her nation would not be subjected to threats of any kind.

International Monetary Fund chief Christine Lagarde warned Monday that Argentina faces a "red card" if it does not produce acceptable data on growth and inflation by December.

An animated Kirchner, speaking to the UN General Assembly, said: "My country is not a football pitch. It is a sovereign nation which makes sovereign decisions.

"As such it is not going to be submitted to any pressure, and much less to any threat," she said to cheers.

This AFP story was posted on the france24.com Internet site on Tuesday...and it's Roy Stephens first offering of the day. The link is here.

Senior traders at Royal Bank of Scotland boasted about operating a “cartel” that made “amazing” amounts of money by rigging interest rates, it has been disclosed.

Internal messages revealed in court documents apparently show how traders claimed they could manipulate Libor, which is used to set borrowing costs for millions of businesses, consumers and investors.

The messages, some sent just months before the taxpayer was forced to bail out RBS at a cost of more than £40bn, suggest the practice was condoned and encouraged by senior executives at the bank, and have now dragged the taxpayer-backed lender to the heart of the Libor scandal.

Tan Chi Min, a former senior trader at RBS’s global banking and markets division in Singapore, has alleged that managers “condoned collusion” between staff to maximise profits by rigging Libor.

This story was posted on the telegraph.co.uk Internet site very late last night BST. I thank Donald Sinclair for sending it...and it's your first must read of the day as well. The link is here.

Kareem Serageldin, the ex-global head of Credit Suisse Group AG CDO business charged in a bonus-boosting fraud tied to a $5.35 billion trading book, was arrested by London police as he was negotiating his surrender to U.S. authorities, a person familiar with the matter said.

Serageldin, a U.S. citizen who lives in England, was charged in February with masterminding a scheme to fake collateralized debt obligations. He was taken into custody yesterday outside the U.S. consulate, another person with knowledge of the matter said. Both spoke on condition of anonymity because the arrest isn’t public.

Serageldin, who couldn’t be immediately reached for comment, may appear in court for a hearing on the U.S. extradition request as early as today, one of the people said. In February, when he was first charged in Manhattan federal court, Serageldin said through his lawyers that he was surprised since he had been cooperating with U.S. investigators for four years.

This item was posted on the Bloomberg website yesterday evening...and I thank Elliot Simon for his second story in today's column...and the link is here.

"The available data for the third quarter of the year suggest output continued to fall at a significant pace, in an environment in which financial stress remained at very high levels." the Bank said in its monthly report.

Spain's borrowing costs edged back past 6pc on Wednesday as investors sought safer havens. The yield on benchmark ten-year government bonds rose 26 basis points to 6.01pc, the biggest increase since August 31, while the IBEX 35 in Madrid slid 3pc to 7,926.20.

The eurozone's fourth largest economy tumbled into recession in the last quarter of 2011, less than two years after emerging from the previous crisis.

This is another story from yesterday's edition of The Telegraph...and it was posted on their website late yesterday morning BST. It's courtesy of Roy Stephens...and the link is here.

The euro crisis seemed to have disappeared from the streets of southern Europe in recent weeks. But on Tuesday in Spain, it was back as thousands marched in Madrid, resulting in dozens of arrests and injuries. In Greece, a general strike has shut down Athens on Wednesday.

The protests in front of Spanish Parliament in Madrid on Tuesday evening were not huge. But their intensity serve as a warning that patience in the country with ongoing austerity cuts and tax hikes is wearing thin.

Some 6,000 people marched before Spanish Parliament on Tuesday against the belt-tightening measures and several grew violent. Police beat back demonstrators with batons and fired rubber bullets on the crowd, according to several news reports.

Ongoing discontent in Greece over austerity measures there took a disruptive turn on Wednesday as the country's two largest unions went out on a 24-hour general strike. Hundreds of thousands of workers walked off their jobs shutting down schools, museums and courts, slowing down air traffic control and otherwise disrupting transportation. Hospitals are operating with minimal staff.

Thousands of police gathered in central Athens preparing for protests against government salary and pension cuts and other belt-tightening measures. In February protests against austerity measures turned violent as demonstrators set shops on fire. Many stores in the Greek capital closed Wednesday in advance of the protests.

This article showed up on the German website spiegel.de yesterday...and I thank Roy Stephens for sharing it with us. It's worth skimming...and the link is here.

Spain has taken another confident stride to becoming the next Greece, a status long predicted for the country in some quarters.

When the economic situation is bad (the country’s GDP estimates fell again on Wednesday) there’s nothing like a dose of political mismanagement to give things a good hard shove towards the same abyss that Athens disappeared into sometime in the middle of last year.

You can’t let a gun off slowly, but Spanish prime minister Mariano Rajoy has been openly flirting with the idea of seeking a bail-out from the European Central Bank in recent days but only if capital market investors forced Spain into it by sending yields on Spanish government debt higher.

In the land of bull fighting, he has waved the proverbial red rag. Lo and behold, Spanish bond yields duly shot up again on Wednesday to 6pc, pricing Spain out of the markets and forcing him closer to going cap in hand to Frankfurt, assuming the ECB bail-out is actually real as opposed to an empty promise. This, in turn, will undermine his political credibility at home which the riots in Madrid and secession fever in Catalonia reveal is already suffering.

This story, from The Telegraph late yesterday evening BST, is another item courtesy of Roy Stephens. The link is here.

A report by Standard & Poor’s claimed the Swiss National Bank had bought €80bn (£64bn) of German, Dutch, French, Finnish and Austrian bonds this year to counter a flood of money entering the country and hold the franc at 1.20 to the euro.

The scale is vast. The SNB has effectively financed almost 90pc of the combined budget deficits of five core countries over the same period. The bank’s total reserves have soared to 79pc of GDP.

Some inflows into Switzerland are funds repatriated by Swiss citizens seeking shelter from the global storm. But a large part is either capital flight from Italy, Spain and Greece, or money withdrawn by Swiss banks from the Club Med bloc as they cut exposure.

The effect has caused the North-South yield spread to widen further, fuelling the eurozone’s vicious cycle. “We think this 'euro-recycling’ is exacerbating the trend of diverging market conditions for sovereign bonds in the eurozone,” said the agency.

This Ambrose Evans-Pritchard offering was posted on the telegraph.co.uk website early on Wednesday evening...and it's well worth reading. The stories from Roy Stephens just keep on rolling...and the link is here.

Germany intends to be one of the first countries to try to put the brakes on high-frequency trading, the computer-driven force that has been rattling stock markets across the globe.

Chancellor Angela Merkel’s government approved draft legislation on Wednesday that foresees imposing additional controls on such trading. The proposed measures include requiring that all high-frequency traders be licensed, requiring clear labeling of all financial products traded by powerful algorithms without human intervention and limiting the number of orders that may be placed without a corresponding trade. Traders who violate the limits, which would be set once the law took effect, would face a fine.

“Computer-generated algorithmic transaction involves a variety of new risks,” Germany’s finance ministry said in a statement. “Germany is reacting to these risks with legislation that will create more transparency, security and a better overview.”

This story showed up in The New York Times on Tuesday...and it's brought to you courtesy of Donald Sinclair. The link is here.

Every big financial crisis has its own defining characteristics, but both in origin and consequence, such implosions tend to be remarkably similar. In virtually every case, you first see a long period of excess in financial risk-taking, where credit spirals out of control. This ultimately proves unsustainable, and in the resulting bust the process of credit expansion goes violently into reverse, causing often catastrophic economic damage, from which it will typically take many years to recover. There is no quick bounce back from recessions caused by financial crises.

In one important respect, however, the present maelstrom is unique. Never before have we seen a financial crisis result in such all-encompassing and explosive growth in public indebtedness. This is not a problem exclusive to Britain, nor is the UK even the worst example of it. To a greater or lesser extent, all advanced economies that were directly involved in the financial crisis have suffered the same phenomenon, with public debt climbing to previously unthinkable levels. This might be understandable in the event of a no-holds-barred military conflict, where nations are fighting for their very existence, but for public indebtedness to be approaching such extremes in peacetime is quite without precedent.

Well, Jeremy Warner over at The Telegraph pretty much sums up the predicament that we are all in...and it's worth reading if you have the time. It was posted on their website at 8:25 p.m. BST yesterday evening...and I thank Roy Stephens for digging it up. The link is here.

The first blog is with Pierre Lassonde...and it's entitled "Gold & Central Banks Fearful of a Depression". The next blog is with Dr. Stephen Leeb. It's headlined "Post Correction, The Upside For Gold & Silver Are Enormous". The last blog is with Dan Norcini...and it bears the title "More Incredibly Important Developments in the Gold Market". The audio interview is with Rick Rule.

Everyone loves gold these days. Deutsche Bank sees $2000 gold soon. And Citi says it could go to $2500 in six months.

BofA, too: the firm recently initiated a $2,400 target price for the shiny yellow metal since the Fed's announcement of open-ended bond buying.

However, BofA analyst Stephen Suttmeier thinks there's a case to be made that gold goes even higher than the bank's official call.

Everyone likes to pick a gold price number, but nobody really knows for sure what it's going to be. All I can tell you is that a free-market gold price has never existed in all of history...and if it was allowed to trade freely, the market-clearing price would make your eyes glaze over.

Nick Laird sent me this businessinsider.com story from Tuesday evening in the wee hours of yesterday morning...but Wednesday's column had so much stuff in it already, that I decided to wait an extra day to post it. The article is typical of the main stream media chatter on gold, but the chart is worth a look...and the link is here.

John is the proprietor over at DollarCollapse.com...and co-author [with James Turk] of the book The Collapse of the Dollar and How to Profit From It. The interview is posted over at the geckoresearch.com Internet site...and runs for 21:28 minutes. The link is here.

Gold may have more prestige and a broader fan base, but experts say, silver is where the real action is right now. In the past 3 months alone, the price of silver has risen 25%, while gold's recent run up, albeit impressive, has only been about half as strong.

Still, whether it's gold or silver or platinum or palladium you are chasing, the penchant for precious metals has been reignited by the dovish central bank action commonly called QE3. But Tom Lydon, the editor of ETF Trends, says when it comes to silver, there's more to this hard asset story than monetary policy, inflation concerns and fear.

Not a word about the price management scheme, nor JPMorgan's obscene short position in silver on the Comex futures market. It's the usual Pabulum from the MSM...but a positive story nonetheless. Just don't buy either SLV or GLD that the guest is recommending. The story was posted over at the finance.yahoo.com Internet site early yesterday afternoon Eastern time...and I thank Elliot Simon for bringing it to our attention. The link is here.

Monetary easing is widely seen as a boon to gold, which gets its moment in the sun as the go-to investment as soon as the words such as “money printing” and “central bank” start to pop up in the press. So naturally our eyebrows arched when we saw the latest International Monetary Fund numbers for gold reserves out on Tuesday.

It turns out that some central banks are buying gold, with South Korea one of the more notable buyers. South Korea’s reserves increased nearly 30%, from 1.750 million troy ounces in June to 2.260 million troy ounces in July, or roughly 70 metric tons. Russia also bumped its gold rainy-day fund to 30,113 million troy ounces in July from 29,516 million troy ounces in the previous month.

Turkey and Kazakhstan also bought more of the yellow metal. In most cases, countries kept their reserves unchanged in the 30-day period, having added to their reserves at some point in the past couple of years.

This very short marketwatch.com story from Tuesday afternoon is not worth reading, as the above three paragraphs are the best parts of it. I thank West Virginia reader Elliot Simon for his final offering in today's column...and the link to the hard copy of this article is here.

With diminished Russian state inventories, "extremely constrained" palladium supply growth and steadily increasing demand, the palladium market is expected to be under supplied in the future, says Stillwater Mining.

In their analysis, Stillwater noted that if the 775,000 ounces in palladium sales reportedly supplied from the dwindling Russian government stockpile are excluded from 2011 supply figures, "the share of palladium supply from primary mine production, used for catalytic converters increased from 67% to 73% from total consumption."

The white paper asserted, "Palladium is facing a substantial supply deficit going forward that will likely be met by a combination of price-driven demand destruction and shifting back to platinum or using rhodium."

"With Russian state inventories diminished, palladium supply growth extremely constrained, and demand increasing steadily, the market is expected to be under supplied going forward," the company said.

This story was posted on the mineweb.com Internet site earlier this morning...and the link is here.

Joe Kernen seems barely interested in this interview...and it appears that he wishes he were elsewhere. I was less than impressed with his 'bedside manner'. I'm somewhat surprised that Eric never mentioned anything about the price management schemes in either gold or silver...as this was the perfect opportunity to do so. I'll ask him why he didn't next time we have a chat. I thank Ontario reader Richard O'Mara for bringing this 8:02 video clip to our attention...and it's certainly worth watching. The link is here.

South African mine strikes have halted about 39 percent of national gold output, including at AngloGold Ashanti Ltd. and Gold Fields Ltd., as unofficial walkouts spread in the country amid demands for above-inflation pay increases.

AngloGold, the world's third-largest gold producer, today said all its South African mines have been stopped. Gold Fields lost a metric ton, or about 32,000 ounces, of output because of strikes at its KDC and Beatrix sites.

Gold-mine workers have been encouraged by the pay increase prompted by a wildcat strike in the platinum industry. A six-week walkout at Lonmin Plc's Marikana mine erupted into violence that killed 46, including 34 shot by police last month. Workers won wage gains of as much as 22 percent, more than four times the August inflation rate, before returning on Sept. 20. Coal of Africa Ltd. employees and about 20,000 transport workers are also on strike.

I plucked this Bloomberg story from a GATA release yesterday...and I consider it a must read. It was filed from Johannesburg yesterday...and the link is here.